December 2010 ~ Managing a Car Loan

Friday, December 31, 2010

The Best Loans for Teenagers

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For teenagers, who typically have little to no credit, obtaining money through the form of a loan can be a challenging process. Whether for a car, college or personal reasons, teenagers seeking loans do have some options as they start their financial portfolio.

Depending on the responsibility level of a teenager, the best option for a first loan may be borrowing money from her parents. Even with this type of assistance, parents can still establish a monthly repayment plan as well as penalties for late payments. This introductory type of lending can help parents determine if their teenager is ready for the fiscal commitment and responsibility of taking on a bank loan.

When searching for a car loan for a teenager, there are important decisions to make. Considering the depreciation value of new vehicles, it is best to have a new teen driver purchase a used vehicle. The next essential step in finding a loan for a teen driver is to identify a cosigner for the auto loan. Most lenders will require a cosigner due to a teenager's lack of credit or demonstrated consistent income. Parents should assist their teens in researching the lender to ensure it is a reliable source.

The world of student loans is often complicated. The first step for any teenager entering college is to fill out a Free Application for Federal Student Aid, or FASFA. After filling out a FASFA form, the applicant is then informed as to what amount of federal student aid he is eligible for. With assistance from parents, teenagers can make the important determination of choosing a loan type, either subsidized or unsubsidized, and lender.

For teenagers who want to take out a loan for personal use, options are limited. If teens and their parents can agree on an amount and a cosigner, and find an affordable repayment option, personal loans are a much better choice than introducing teenagers to credit cards. When weighing the pros and cons of taking out a personal loan, teenagers should ask themselves if it is possible to create a savings plan that would get them the amount of money they need versus taking out a personal loan.

How to Reduce Auto Loan Payments

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Consumers who buy a new or used vehicle may not always be able to make their monthly payments. They may have been offered a bad deal with a high interest rate and now need to find ways to lower their monthly payments. Other buyers may have had more money when they originally bought their cars, but unexpected financial setbacks may have affected their ability to pay on time every month. These consumers have some homework to do as they choose the best option for their individual situations.

Instructions

Read your auto loan paperwork and highlight your current interest rate. If your current monthly payment is too high for you to comfortably pay on time every month, the bank or loan company can help you refinance your current loan.

Call your loan company and ask what your current payoff amount is. If you want to try for a lower interest rate, the loan company will pull your credit score; if your credit is good, you may qualify for a lower interest rate. Decide if you want to extend the term of your loan, or ask for a lower interest rate with a refinance loan.

Explain your financial situation to the loan officer and ask if the loan company can help you by refinancing your loan. If it agrees to do so, a refinancing loan pays off the old loan. You are starting at the beginning, as if you had just purchased your car. The loan company may extend the term of your loan or may lower your interest rate.

Make larger payments and ask to have them applied to the principal of your car loan. This makes your interest rate shrink more quickly and brings your principal balance down more quickly as well.

Consolidate your car loan payment with other loans you have, both secured and unsecured. With a consolidated loan, you make one lump-sum payment, meaning you can pay off your car faster.

How to Break a Lease for a Ford Car

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Leasing a Ford car means that you have the right to drive that vehicle for a predetermined amount of time, as long as you're making timely payments. When the lease term ends, you return the car. When you lease a Ford, you're actually dealing with your leasing company, which could be the Ford dealership or a bank. They purchase the car from the Ford manufacturer and allow you to lease it for a certain amount of time. Talk to your lease holder if you want to be free of your Ford lease.

Instructions

Locate a copy of your leasing contract. If you cannot find one, then contact your Ford leasing company and request a copy of the contract.

Read the early termination clause in your leasing contract. It should have an explanation of how the penalties and fees for an early termination are calculated.

Calculate the early termination fee that you'll have to pay, using a copy of your latest bill. If you cannot find one, contact your local Ford leasing company to have a copy sent to you.

Bring the car, along with a check for the early termination fee, to the Ford leasing company. Explain that you want to break the lease on your car and are prepared to pay the penalties.

Sign the paperwork and give your check to the Ford leasing employee.

Contact your Ford leasing company and ask if you can transfer your lease to another qualified person.

Find someone willing to assume the remainder of your lease. One way to find a person is with a lease transfer company (see "Resources"). These companies can match you with someone who wants to assume a car lease.

Pay the fee and create your profile, if you choose to use a company.

Talk to the person who will assume your lease about how they will pick up your car. Determine who will pay the lease transfer fees to Ford.

Go with the person to your Ford leasing company. Ask them to transfer the lease to her. They will have to check her credit and create a new contract before the lease can be transferred. If you found her through an online company, they may negotiate the transfer with your leasing company, so you won't have to go in person to the leasing company.

Sign the forms and give the Ford to the person who assumed the lease.

Do You Have to Put Money Down When Financing a Car?

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Whether a down payment is required when an automobile purchase is financed depends on your credit rating, the value of the vehicle and---in some cases---your personal preference. A down payment lowers your monthly loan payment and decreases the amount you will pay back over the life of the loan. While some financing offers leave the decision regarding a down payment to the buyer, in other circumstances you may have no choice but to provide a down payment.

A down payment may not be optional. Auto loan providers assess a vehicle's value and a borrower's credit standing to determine the amount of a vehicle loan, known as a loan-to-value ratio. With poor credit, you may obtain a loan approval, but for as low as 60 percent of the vehicle's bank-determined value. For this reason, you may find that you can't finance your tax charges, aftermarket purchases or complete vehicle price, so you'll have to put money down toward the loan.

With excellent credit, you might obtain a loan for up to 120 percent of the vehicle's value.

If you have good credit but your income is limited, your lender may require a down payment to ensure your monthly payment is affordable. Without a down payment, you may not obtain an approval. For example, if you make $22,000 per year but your monthly expenses when annualized total $17,000, your lender will decline a loan that requires a payment of $500 per month. It may, however, approve financing of a vehicle that requires a payment of $200 per month. You may have to increase the length of your loan term and provide a down payment to obtain a loan approval to purchase the more expensive vehicle.

Most auto loan providers adjust interest rates by term length. You may obtain the same rate for purchases financed for up to a 60 months. Rates increase for a 72-month loan and increase again for a longer term. To obtain a competitive rate and an affordable monthly payment, you may want to provide a down payment to avoid paying back excess money for interest charges. Also, if you have an opportunity to obtain a zero percent loan for 36 months, the monthly payment may be too high for your budget. You may have to put money down toward the loan to afford the monthly payment amount.

Even if you don't have to provide a down payment toward your loan, consider doing so to create equity. Financing more than your vehicle's value results in an upside down car loan, meaning you owe more than the vehicle is worth. This creates problems when you try to sell your vehicle or trade it in toward another purchase. While a collision policy is required by most lenders during the term of a loan, it only pays your lender for the vehicle's market value if the car becomes a loss. You'll have to satisfy the remainder of the loan to protect your credit standing.

Can You Transfer a Car Loan to Someone Else?

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Banks do not allow car loan transfers for various reasons. Loan terms are based on credit history and income; the person you want to transfer to likely has a different credit score, history and income than you. The loan is based on your vehicle's value, which has likely changed since you initiated your loan. To end your loan, you must sell your vehicle. The person you want to transfer your loan to must apply for financing of his own to purchase the car from you and your lender.

Most lenders base approved interest rates on a tier scale. While lenders advertise their lowest rates, usually only excellent credit borrowers can obtain approval for the best rates. Vehicle age and mileage also influences loan rates and term. Depending on approved tier, rates may increase by one interest rate point or more. Loan determining factors also include income, term applied for, vehicle and credit history. For this reason, approved interest rates, term and down payment requirements may be different for another borrower.

The person you want to transfer your loan to is considered the vehicle's buyer. To help speed the selling process, ask the buyer to apply for his loan through your lender. This way, the loan is paid off quickly and most of the paperwork is handled by your lender. The buyer can also apply to a different lender. To release ownership of the vehicle, you must satisfy your loan balance. You or the buyer must come up with the remaining loan balance due if the sales price or approval amount is not enough to cover the balance.

Because the vehicle loan can't be "transferred," the buyer can expect to pay all applicable purchase fees as required by your state. Most states charge taxes on a vehicle purchase, so the buyer will have to come up with her tax fees as a down payment, or apply for a larger loan amount than expected. The buyer must also pay your state's registration and title application fees. Most states also require some form of inspection or emission testing upon the transfer of ownership.

If you want to remain the vehicle's co-owner, you can add your buyer to your car loan. You will have to reapply for finance either at your lender or another, also known as a refinance. You can avoid paying additional taxes and state fees this way. With good credit, you and your co-owner can likely lower the loan's monthly payment amount if lower interest rates are available. You can also use a down payment or increase the loan term to lower monthly payments.

Advantages of Having a Trade-in When Leasing a Car

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Using a trade-in toward a lease may prove beneficial when the trade is used as a down payment. Leasing only requires you to pay for about half of the car's value over the lease term, so using your trade as a down payment can have a significant impact on your monthly payment amount, or it can reduce or eliminate the down payment.

Leasing payments are based on vehicle depreciation, which results in paying for about 50 percent of the vehicle's value over the term of the lease. Because of this, any down payment or trade allowance greatly reduces your monthly payment amount, more so than a comparable loan deal. Expect to receive a discount of about $30 per month for every thousand dollars you put toward your lease. For example, a trade-in worth $4,000 can reduce your lease payment by $120 per month.

Most lease advertisements require a down payment to reach a specific monthly payment. You can avoid having to use your out-of-pocket cash by offering your trade instead. Lease advertisements often call for taxes, fees and an additional down payment, which can easily add up to thousands of dollars. Some leases require as much as $5,000 for a down payment. Rather than sell your vehicle on your own or tap into your savings to provide the down payment, you can use your vehicle as a trade instead.

Selling a vehicle privately is often time-consuming. Expect to advertise your vehicle, clean it and show it to potential buyers. Even if your vehicle has repair issues, you can trade it to a dealer without having to worry about the next owner or reducing the vehicle's sales price because of the car's running condition. If you owe money on your trade-in's current loan, the dealer must pay it off. You can transfer money to your current lease and avoid having to come up with the extra money to satisfy your loan if you owe more than the car's worth. If selling privately, you'd have to pay off the remainder of the loan balance if your sale price is not enough to cover the loan.

When leasing a vehicle, the leasing bank is the car's owner, not you. As a condition of leasing, you must maintain an insurance policy with your leasing bank listed as the policy's loss-payee. In the event that your vehicle is determined a loss, you won't receive any of your down payment or lease payments back. For this reason, consider offering a minimum down payment toward your lease. You stand to lose substantial money if your trade value pays off the total lease amount or a large portion of it.

How to Answer: What's My Credit Score?

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A credit report and a credit score are different things. By law, you are entitled to get a free credit report once a year from each of the three credit-reporting companies -- Equifax, Experian and TransUnion. You can get another credit report if you are denied credit for any reason. However, these reports don't usually contain your credit score, which is based on the information in your credit reports. In most cases, you will have to buy your score from one or all of the credit-reporting companies.

Instructions

Log on to the websites of the credit-reporting companies and view their services. Each one should allow you to purchase a credit score report. Each company has different criteria for creating your credit score, so the scores may be different. If you can afford it, purchase all three credit scores.

Sign up for the service or services that you need. Sometimes, the companies will offer a free credit score as a promotion, so look out for this. You will need to provide all of your personal information and answer some security questions. You'll probably have to create a login ID as well.

Log in to the services that you signed up for and view your credit score. Credit scores range from 300 to 850. Higher scores are preferred by lenders. If your score is low, pull up your free credit report and see where you can improve your credit.

Four Factors to Consider Before Leasing a Car

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For people who like to change cars every few years, purchasing can get expensive, as can trade-ins. For these individuals, leasing is often the best option, though it can be pricier than purchasing a car that you will at least eventually own. However, there are a few things to consider before you go out to lease a vehicle.

When you lease a vehicle, you still have to put down a down payment in most cases, which can range from $1,000 to $3,000, according to Bankrate. If something happens to the vehicle and the insurance company has to pay the leasing company for the car, you don't get the down payment back, which means you are out a few thousand dollars. To avoid this, try to lease the vehicle with little to no money down, if possible.

Leasing is not for everyone, particularly those who want to have something they own outright at some point. The way to determine whether or not you should lease is to decide what your thoughts are about owning -- or not owning -- a vehicle and whether or not you need to have a new car to drive at certain intervals in your life. Figure out if you would drive a vehicle for a longer period if you actually owned it outright or what your thoughts are about regular car payments over an extended period of time.

Make sure you understand that the payments for a lease are calculated differently than they are for cars that are financed. Lease payments, according to Bankrate, are actually calculated on the depreciation value of the car. So, if the car costs $10,000 today, it will be worth $8,000 in two years. The lease payment is then calculated on the amount of value lost, which is a benefit to leasing, because payments are generally much lower than they would be on car you are buying outright.

Car lease contracts are intricate and complicated; moreover, they are so much harder to get out of than a regular financing contract. So make sure the car you decide to lease is one that you like and plan to stay in for the duration of the lease contract. Alternatively, you can ask the leasing company to consider a transfer condition in your lease, which allows you to transfer the terms of your lease to another vehicle before the contract period has expired.

How to Terminate a GMAC Lease Early

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During the term of a GMAC lease, the repayment terms may become difficult to manage. Usually, this is the result of the lessee's changing financial situation. Either that, or the lessee simply overestimated his ability to pay. GMAC designs its lease agreements to run full term. Anything less is an inconvenience to the company. While it may be difficult, and even costly, to terminate your GMAC lease early, it can be done.

Instructions

Review your GMAC lease agreement, particularly the section on early termination. Note any fees or penalties the company will assess for ending the lease prematurely.

Write a request letter. Even if you are going directly to the dealership, it is good to have the request in writing. Include your name, address and the GMAC dealership along with the make, model and vehicle identification number of the car. Include your reasons for terminating the lease early (e.g. financial hardship).

Return your GMAC vehicle to the dealership. The dealer will inspect the vehicle for damage and check the mileage. You must pay for any repairs or mile overages incurred to this point.

Sign a lease termination agreement provided to you by the dealer. The agreement states that you are relinquishing your rights to the vehicle and that you agree to pay any fees associated with the termination.

Pay the fees to the dealer. The dealer may waive some or all of the fees depending on your circumstances. However, you should always be prepared to pay the full amount as detailed in your original GMAC lease.

How to Get the Payoff for a Car

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If you have a car loan and you want to pay that loan off early, you may be able to do so without incurring a penalty. But paying off an auto loan by tallying the number of payments you have left and sending a check off with your payment stubs may not pay off your car. Instead, there is a way you can find out how much you owe on your car in order to make one final payment.

Instructions

Locate your vehicle purchase agreement. When you purchased your car, you signed a contract known as a vehicle purchase agreement that outlines how much you are financing, your interest rate, length of the loan and your total payments. Find that agreement as the information contained inside will help you prepare to pay off your auto loan early.

Review your vehicle purchase agreement. Examine your vehicle purchase agreement to locate terminology, such as prepayment penalties, early termination penalty or other restrictions. These penalties do not mean that you cannot pay your car off early, rather they often suggest that you will not receive a refund on your interest or you might be charged an early termination fee. Just keep these things in mind when you contact your lender.

Contact your lender. Your vehicle purchase agreement should contain a phone number for your lender's loan department. Locate that phone number, speak with a loan representative, and ask what your loan payoff would be if you paid the loan off today. That amount will include the remaining balance on your auto loan, plus fees. Depending how your car loan was written, you may be entitled to a partial refund on interest charges for paying off your car early. Send a check for the total amount, if you are ready to pay off your car.

Can You Get a Title Loan If Your License Is Suspended?

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Title loans, a temporary source of funding for cash-strapped borrowers, are often described as easy to get but impossible to pay off. That's because interest rates and fees can snowball to many times the original loan amount. Missing one payment, or having your car impounded, can result in repossession. Although some lenders may require a valid driver's license, others may not; but the risk lies in your behavior during the loan term.

If you own your car free-and-clear and there are no other liens against it, you can apply for a title loan. With a title loan, a lender loans you cash up to a percentage of the value of the car, anywhere from 20 to 50 percent. Loan terms are short and costly; 30-day loans are common, with annual percentage rates in the triple-digits, according to CNN. While borrowers usually have the option to roll the loan over into another 30-day period, the fees and interest charges can quickly exceed the amount of the principal balance.

If you have a loan on the car or have other liens against it, you aren't eligible. You must supply a set of keys to the lender, in case they need to repossess it. Other requirements vary; for example, some lenders may require a valid driver's license, proof of insurance, and proof of income, while other lenders may only require verification of address and a "state-issued photo ID," according to the Mid-South Title Loans website. Still others may require a vehicle inspection.

Aside from the financial risk of taking on a loan with exorbitant interest and fees, defaulting on a single payment can result in your car being repossessed. Title lenders are considered predatory because they only lend a small portion of the vehicle's value, then charge interest that practically guarantees default; when the borrower defaults, the lender repossesses the car, sells it, and keeps the difference between the loan and the car's value.

Be sure to read the terms of your title loan carefully before signing on the dotted line. If your license is suspended during the term of a title loan, or your car is impounded, the lender may have the right to repossess the car.

In July 2010, a new federal law was passed that will create a Consumer Financial Protection Bureau, most likely during 2011, according to Americans for Fairness in Lending. This bureau will protect consumers from the predatory lending practices that title lenders use to help only one party: themselves.

How to Find the True Market Value for a Used Car

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Whether you are buying a used car or selling one, make sure you get the best deal possible on your vehicle by calculating its true market value. This will tell you what price should be paid for your vehicle using a private party seller or a dealership. It will also let you know how much you can expect to receive on a used car that is being traded in.

Instructions

Visit the Kelley Blue Book website. Click the "Used" tab at the top of the page.

Select the year, make and model of your car. Click the "Go" button.

Enter your ZIP code.

Select the true market value price you wish to see. You can choose the trade-in value, private party value or suggested retail value.

Customize your appraisal by entering mileage, optional equipment and vehicle condition. Click the "Get Pricing Quote" button.

Visit the Edmunds website. Click the "True Market Value" link near the top left-hand side of the page.

Select the year, make and model of your used vehicle by clicking the drop-down menu at the bottom of the page.

Click the "Go" button.

Select your car from the list of search results.Your car's true market value will be displayed in the window. The results are split into three categories: dealer trade-in, private party and dealer retail.

Click the "Customized Appraisal" button to list other vehicle details, such as mileage, optional equipment that you have installed on the car and the condition of the vehicle. Click the "Get Pricing Report" button.

Pros & Cons of Owning & Leasing a Car

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When you are in the market for a new car, both leasing and buying might be options for you to consider. Before making a decision as to which method you will use to acquire your car, you have to look at the pros and cons of each strategy.

The major advantage of leasing a car is that your monthly payment will be smaller than if you purchase. This is especially true if interest rates in the market are high. Another advantage of leasing a car is that you do not have to worry about major repairs. If something happens with the car, you simply take it to the dealership. At the end of your lease, you can also turn in the car and get another one if you want. You do not have to worry about selling the car or doing anything with it.

On the other side of the spectrum, leasing a car also has a few negatives to consider. For example, you are not accumulating any equity in the car. When you lease, you just pay for the use of the car. At the end of the lease, you have nothing to show for all those payments. Another drawback of leasing is that you have a limited amount of miles that you can drive each year. If you go over that limit, you have to pay a per-mile charge.

When you buy a car, the biggest advantage is that you can eliminate a monthly payment after the loan is over. If you get a quality car, you might be able to drive several years without having to worry about any kind of payment. During that time, you can save up for your next car and eventually just pay cash for a car. Another advantage is that you can use the car as you want. It has no mileage restrictions and you can treat it how you want without having to worry about paying penalties.

One of the drawbacks of buying a car is that your monthly payment will be higher. This might prevent you from getting the car that you actually want. Another problem with buying is that after the factory warranty runs out, you have to handle the repairs yourself. If you run into a situation where you have to pay for a major repair, it can set you back thousands of dollars. You will also not get to enjoy a new car every few years as you would with a lease.

How to Apply for Ford Lost Job Payment Plan

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In March 2009, Ford introduced a benefit to customers who choose to finance new Ford, Lincoln or Mercury vehicles. This benefit is referred to as the Ford Advantage Plan. Under the Ford Advantage plan, Ford will cover your payments if you become involuntarily unemployed, while paying for a financed vehicle. Ford will cover payments up to $700 per month for up to 12 months.

Instructions

Select the Ford, Lincoln or Mercury vehicle you would like to purchase or lease. The vehicle must be new, not used.

Complete a Ford Credit application. This application can be completed online via the Ford Credit website or through a Ford Authorized dealership.

Submit your completed application to the Ford Financing Department. Once your application is approved by Ford Financing, you are automatically enrolled in the Ford Advantage plan.

How to Negotiate a Fixed Lease Price for a Car

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The prices and terms you see advertised for car leases are assumed on MSRP (manufacturer's suggested retail price), also known as "sticker price." Leases are most profitable for dealerships for this reason. When you agree to a monthly payment, your leasing bank pays the dealer for the price of the car and then leases it to you based on the price you negotiated with the dealer, if any. Just as you wouldn't pay full sticker price for a car purchase, you should similarly negotiate with the dealer for lease payments.

Instructions

Build your vehicle online at the manufacturer's website to determine its accurate selling price. Choose the options and features you want and print the information.

Research the vehicle's invoice price online. Edmunds.com and the Kelley Blue Book website both report invoice pricing. Add the options you chose when you virtually built the vehicle to obtain accurate invoice pricing.

Review leasing offers at the manufacturer's website, such as down payment requirement, monthly payment and vehicle type. Manufacturers often advertise base-model vehicles, so increase the price appropriately if the car you want costs more than the advertised model.

Add $30 per month for every thousand dollars you add to the advertised vehicle's price or add the price difference to your down payment to determine the payment for a vehicle priced at MSRP. For example, if the advertised vehicle costs $20,000 but the one you want costs $22,000, either add $60 to the monthly payment amount or increase the advertised down payment requirement to determine an accurate monthly payment before discounts.

Aim to pay anywhere from $500 to $1,000 over invoice. Calculate the price difference in your monthly payment by decreasing the monthly payment amount by $30 for every $1,000 off the regularly priced vehicle. For example, if the advertised car cost $30,000 with a monthly lease payment of $400 but you've determine that $28,000 is a fair offer, plan to offer $340 during negotiations.

Determine how far you'd drive for the right payment. Obtain email addresses for several dealerships around your area. The manufacturer's website lists dealership websites and contact information based on your Zip Code.

Email a dealer and state that you're ready to lease a vehicle immediately, but only if the dealer can meet your price. Once you've emailed a price, use it for further negotiating with other dealers.

Send an email to another dealer stating your readiness to lease if the dealer can beat your current price offer. Continue emailing dealers until your price is met.

Contact the dealership who met your price and verify the lease's term, mileage, down payment requirement and monthly payment. Make an appointment to meet with the person who arranged your pricing and sign your paperwork.

The Disadvantages of Financing a Car

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Financing, at first glance, seems to be a great way to purchase a new or newer vehicle when you don't have the money on hand to purchase. Some people, at the same time, prefer to drive their vehicle until it is beyond repair. Financing your next car has disadvantages, just as any other method of ownership, as a vehicle almost never appreciates. Rather it is a consistently depreciating investment.

Because you are borrowing money, you'll be paying the bank back for your vehicle with interest included. For example, if you got a "great" deal on a vehicle for the cost of $15,000, figured fees and tax at $1,388 and put down $2000 towards your loan amount, your total amount financed is $14,388. Paying this loan back over a span of 60 months at a rate of only five-percent your monthly payment is $271.51. The total amount paid over the term of the loan is $16,290.60---you're paying an extra $1902.60 for your car. For someone with fair to good credit, you may see a rate of eight-percent for the same loan, which would equal a higher monthly payment and a repayment amount of $3115.80 in interest. This is certainly a disadvantage of financing when you look at the total lending picture and what you are paying in the long run. Essentially, your money down barely covers interest in the first example, and in the second, your money down only paid towards interest of the loan. Neither affected the principal.

Your vehicle depreciates the moment you drive it off of the dealer's lot. A brand-new car depreciates thousands once you take ownership. It takes years before you're able to break even on the amount you paid and the vehicle's worth in resale or trade in. Using a used car appraisal Internet site, such as Edmunds (Edmunds.com) or Kelley Blue Book (KBB.com), check the amount of a vehicle's worth for trade or private sale in comparison to retail numbers to fully gauge depreciation. You may have to stay in your vehicle for longer than you'd like before you can sell it, even if your needs have changed. For example, if you learn you have to commute for a job and currently own an SUV (Sport Utility Vehicle), you're stuck paying for more gas than you'd like. If you start a family and own a small coupe, you may have to wait before you can purchase a larger vehicle.

In addition to paying your monthly payment, your vehicle will require maintenance. Many people do not consider the maintenance costs on top of monthly payments. Because you are financing to own your vehicle at some point, it is likely the vehicle you are financing will come out of its bumper-to-bumper warranty period, meaning that any repairs are your responsibility.

In 2009, General Motors announced that the Saturn and Pontiac brands were discontinued. For people who own these vehicles, they have seen a larger than normal depreciation effect than ever expected. You cannot anticipate future market conditions. Even if you got a good deal on your car, you may still see the affects of a changed market when you try to trade out of or sell your vehicle. Gas prices are unpredictable as are recalls, both of which can greatly affect your vehicles worth in the long run. Financing a vehicle results in risk---you are at mercy of the economic market.

Who Pays When the Co-signer on a Car Loan Dies?

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People often co-sign on car loans when the person who needs the loan has insufficient credit history or bad credit, preventing him from getting the loan on his own or from getting a decent interest rate on the loan. However, if the unexpected happens and one of the co-signers on a car loan dies, the remaining co-signer needs to be ready to pay up.

Co-signing on a loan means accepting equal liability for the loan as the other person whose name is on it. That means that financial responsibility is shared equally, even if just one of those two people drives the car.

If the person for whom you co-signed dies, the liability for the loan falls to you. Alternately, if you needed a co-signer to get your car loan and that person has since passed away, you are the sole borrower on the loan and as such are entirely responsible for paying the balance off. As such, you will need to make monthly, on-time payments on the loan until it is completely paid off.

To take a deceased co-signer's name off a car loan, you'll have to present the loan company with a valid death certificate. This is typically the only way to get a deceased co-signer's name off a car loan, making the remaining borrower the sole and primary account holder. If bills were sent to the deceased person's address, you also need to tell the lender to begin sending bills to your address instead.

If the person who died is the co-signer who brought good credit to the table, the loan company may decide to change the terms of the loan to reflect the remaining borrower's financial situation and creditworthiness. To determine whether your individual loan company has the right to do this, read carefully through the fine print in your loan agreement. Unless there's any language specifically stating that you have an obligation to inform the lender about the co-signer's death, you can also keep quiet and continue making payments to avoid your interest rate going up.

What to Know About Car Leases

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Leasing a car gives you the option of driving and maintaining a vehicle without actually owning it. Leasing a car is different from buying in a variety of ways including vehicle ownership, car value and upfront costs. Before leasing a vehicle, it is important to understand what is involved and how a car lease can affect you in the long run.

When you lease a car, you are entering into a contract to use a vehicle for an agreed-upon number of months and miles. At the end of the lease term, you return the vehicle and pay end of lease fees and charges. Some car leases have a purchase option which gives you the option to buy the car at the end of the lease term.

Leasing a vehicle has many advantages for the right consumer. Because you do not actually own the vehicle, your monthly payments are lower. You only pay for depreciation of the vehicle during the time you drive the car. At the end of the lease, you can walk away from the vehicle, purchase the car or lease a new car. Leasing gives you the opportunity to drive a new vehicle every two to four years which is a typical lease term.

Leasing a vehicle has several drawbacks. For instance, the upfront cost of leasing a vehicle is significant. You are responsible for the first month's lease payment, security deposits, a down payment, taxes, registration and other lease fees. You will not see a return in these investments because you do not actually own the car. When you return the vehicle, the money you paid up front is essentially lost.

When you lease a vehicle, you take on many responsibilities. During the lease term, you are only allowed to drive the vehicle a limited amount of miles per year, usually between 12,000 and 15,000. If you exceed mileage limits, you must pay additional charges at the end of the lease term. Also, you have to pay additional charges if the vehicle has excessive wear when you return it.

Deciding to lease a car versus buying is a matter of personal preference. When you purchase your vehicle, you get to keep it when you are done paying for it. With a lease, you have to give the car back after years of paying on the car. If you want to terminate a lease early, you are subject to early termination charges. When you buy, you are usually free to pay off your loan early.

Purchasing a vehicle means you can basically treat your vehicle however you want to without the hassle of paying additional charges for excessive wear and tear. However, excessive wear on a vehicle that is owned can significantly decrease the trade in or retail value of the car.

Can a Car Be Repossessed After Late Payments?

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There are numerous reasons why you might fall behind on car payments; perhaps you lost your job or are just simply behind on all of your bills. When this happens, your finance company might give you various options for how to proceed. However, depending on the company in question and your payment history, the consequences might be more severe.

A car repossession can occur when the finance company demonstrates that you are not holding up your end of the bargain when it comes to your finance contract. Some companies are more stringent than others when it comes to the point in which they will come and get the car. When your car is repossessed, the finance company then holds the cards in terms of whether or not they will allow you to take possession of it again.

According to the Federal Trade Commission, your creditor can take back your car from the first missed payment -- because it is considered a default on your car loan. However, most car companies give you more than one missed payment before they come to get your car. This, of course, depends on your payment history. If you have a history of late payments and you get back on track and then miss another one, the finance company may repossess the car because of your history.

If your car is repossessed after a slew of late payments, contact your finance company immediately. Find out what you need to pay to get you car back and work with your account manager to get back on track. Be prepared, however, for the possibility that the finance company may no longer be willing to work with you or may issue exorbitant fees to get your car back after the repossession.

When you get into the contract, ask what happens when you fall behind, so you are aware of the consequences in advance. Moreover, when you start to fall behind, alert your finance company as to the reasons, because they might be able to defer a payment or give you a reduced interest rate for a certain period of time to help you catch back up.

Laws Covering Used Auto Sales in Illinois

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Purchasing a car is an important financial decision that a person should approach carefully and diligently. Many people determine that it is in their best financial interests to purchase a used car. As with any large purchase, the buyer should feel that his vehicle is as-advertised and in good working order. Illinois has a number of laws and statutes regarding the sale and taxation of used vehicles.

Illinois has laws regarding an implied warranty on the sale of most items sold in the state. This implied warranty states that the vehicle is fit for use according to the purpose that the vehicle was intended. Additionally, the implied warranty law states that vehicles that are fraudulently sold with a false odometer reading are not able to be sold unless the vehicle is designated for sale "as-is." Implied warranties can be avoided by used vehicle dealers by designating vehicles that are not merchantable with the "as-is" label.

The Illinois Lemon Law is very specific in relation to used vehicles. Illinois's Lemon Law specifically does not cover used car purchases but does provide used car buyers with a thin layer of protection. This law states that a used car dealer must use specific language to indicate that a vehicle is sold "as-is" and is not under an implied warranty. Dealers that infringe upon this law are liable for a percentage of the repair costs of the vehicle depending upon its age. (See References 2)

Illinois's laws regarding the unfair or deceptive sales of motor vehicles are collectively known as Unfair or Deceptive Acts or Practices (UDAP). This set of laws specifically bans certain unfair or deceptive types of used car sales. The UDAP states that a used vehicle dealer may not attempt to sell a used vehicle under the guise of a new vehicle, may not neglect to disclose physical or mechanical damage to the vehicle and may not neglect to notify the potential buyer that the vehicle in question was returned during a lemon law dispute, in addition to other violations of the law.

Illinois requires that each vehicle presented for title in the state must be assessed the proper sales tax, which must be paid before the vehicle can receive an Illinois vehicle title. If the owner purchased the vehicle in a different state and paid the sales tax in that state, he must complete form RUT-25 that lists the amount of the sale and the amount of tax paid, exempting the owner from paying the Illinois state tax. However, if the vehicle is purchased within the state of Illinois, the vehicle owner should complete form ST-556 and pay the tax that is owed. The Form ST-556 is often completed by the used vehicle dealer, and the taxes are paid at the time of purchase.

How to Lower Your Car Payment by refinancing at a lower interest rate

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With the economy in such a weak state nearly all of us have had our income affected. Being self employed myself I have found that I have needed to tighten the purse strings. I did a bit of research made some calls and lowered my interest rate on my car loan by 5%. This brought our payment down by $100. It was easy. This is what I did.

Instructions

Take a look at your current loan. You will need the amount your payoff amount, interest rate and mileage on your car. If you have experienced a decrease in your monthly income write down what you know. How much has it gone down? How long has it been down? These are questions that you will be asked. You will also need to know how long you have been paying on your current loan and make sure you have not had any late payments or missed any payments. They will be more willing to work with you if you are in good standing with their company.

Now call the company that holds your current car loan. Ask to speak to someone in their finance department. Once you are transferred to someone write down their name, extension and e-mail address. If you get cut off or forget something you will want to speak to the same person. If you do not get the information and have to call back you may have to start over with a new person. Ask if they do refinancing on current cars loans. Let them know what your current percentage rate is and tell them you would like to lower it. By letting them know you want to lower your rate , you are showing them that you know it can be lower then what you are paying now. And that you are wanting to stay current on your payments to them. Do not make it sound like you are unable to pay. Be sure to explain your financial situation. If they are willing to help you go the next step. If they are unable or do not refinance loans go to step 4.

If your finance company is willing to help you gather all of the paperwork and information as soon as possible. The window to respond to them is very short. The fastest way is to have the agent e-mail the forms needed to get the paperwork started. Print them up fill them out and attach any documents that they ask your for. If you forget anything this will affect how long the process takes and it may affect your approval. Be sure to ask questions. If you are directed to another person be sure to get their information as well. Keep in contact with the original person you spoke to. Use them to get information on the status if it seems to be taking a long time.

If your finance company is unable to refinance your loan to lower your interest rate you may still have options. If you google the words car loans you will find a very long list of banks and finance companies. Look for companies that you have heard of. Also another solution would be to contact your bank , let them know the situation and they may be willing to get started as well.

Check your e-mail regularly, the finance company may need further information and you may need to respond by a certain time. Stay on top of it. Read the fine print on all new contracts, be sure to ask questions you do not want any details to be left out. When the processor calls to inform you of your loan details ask he or she to e-mail it to you as well. They sometimes speak so quickly that details are sometimes lost in the mix. Make sure the processor breaks down all of the specifics. Length of new loan, interest rate and when your should expect to get your final contract to be signed. This way you can look over the e-mail and compare it to what your are being told. You will also be looking for the new contract so that you will be able to look over the information that they have e-mailed you as well. When you are sure that everything is in order get the contracts back to the finance company before the deadline date. Be sure to calls them if there are any mistakes. Do it as soon as you notice.

Once you have jumped through all of the hoops and you now have a lower interest rate and a new lower payment, pat yourself on the back. Taking control of your financial security is an ongoing process and an important part of your future.

Steps in Buying a Car From a Friend

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Buying a used car from a friend can often make sense. You may already know the car well and how it has been cared for. However, you still need to go through a series of steps just as if you were buying the car from a seller you do not know.

You may know how well your friend cared for the car, but unexpected flaws or damage may exist. Take the vehicle to an independent mechanic to inspect the vehicle. The mechanic has specialized equipment and knowledge to tell you what, if anything, needs to be repaired. The mechanic also can give you approximate costs of repairs.

Before buying the car, confirm that the title is free and clear. Check to make sure that the title is in your friend's name and does not list a lien holder. For example, seeing the name of a bank marked as the lien-holder means that you're friend doesn't own his vehicle--the bank owns it. Question your friend if the word "salvage" appears on the title. This means that the vehicle has sustained damage that exceeded the value of the car.

Agree to a purchase price and pay your friend. Many private sellers use Kelley Blue Book's "Private Party Value" as a starting point for calculating a fair purchase price. To make the deal close faster and make it more convenient for your friend, cash and money orders can be used instead of checks so that your friend doesn't have to wait for a personal check to clear the bank.

When you purchase the vehicle, you or your friend should compose a Bill of Sale stating the purchase price of the vehicle, in what form you paid for it and when the sale was completed. Drawing up this document can protect you and serve as proof of purchase in case a dispute ever arises. The Bill of Sale typically also contains the Vehicle Identification Number (VIN). Both you and your friend must sign the Bill of Sale. You may have to have the document notarized. You can find out whether your state requires a notarized Bill of Sale by calling your state or county's Bureau of Motor Vehicles.

The back of the title certificate must be completed before you can take ownership. The title certificate contains spaces on the back so that your friend can write in the vehicle's purchase price and odometer reading. Both you and your friend must sign the back of the title to transfer ownership. You may have to do this in the presence of a notary public. When you take the title to the Department of Motor Vehicles to obtain a new title and register the vehicle, you pay any sales tax required by the state.

Purchase insurance before you drive the vehicle. Check with your county's Department of Motor Vehicles to ask whether you need to present insurance for registration purposes. Whether insurance is required for registration purposes or not, you must have insurance before you drive the car away. Contact your insurance company the day you take control of the car and ask to add it to your existing coverage or buy a new policy.

Benefits of Leasing a Car versus Buying

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People who don't want to spend several years paying off a car loan can benefit from the cost savings associated with leasing a vehicle. Consumers who lease their cars can save money on auto maintenance and repairs and make lower monthly payments than they would if they purchased a vehicle.

According to the Edmunds auto information website, prices for new cars have risen faster than most people's incomes. As a result, it's taking some consumers as long as six years to pay off their car loans, which can make leasing a vehicle more appealing to some people. Consumers who lease cars also gain the advantage of making low monthly payments. Lease payments are usually less than loan payments because the lessor only pays for a car's depreciation during the lease term instead of financing the vehicle's total purchase price.

Leasing is especially appealing to people who prefer to drive newer cars because they can turn in a vehicle and lease another one about every three years. Lessors also don't have to be concerned about resale values, since they don't have to sell their cars to get money to buy another one. Leased cars also have low maintenance costs if consumers keep them for three years. Edmunds notes a lessor may only need to pay for oil changes and a brake job during that time period. Other repairs would usually be covered under the car's warranty.

People who don't drive a lot can benefit from the lower costs associated with leasing a car. According to Consumer Reports, lease terms usually limit the number of miles the lessor can drive each year to 12,000 or 15,000 miles. That may be sufficient mileage for people who don't drive to work every week or take long road trips. Lessors can ask for higher mileage limits, but that will cost extra. According to Edmunds, lease terms can include charges of 15 to 30 cents per mile for each mile that a lessor exceeds a mileage limit.

People who use their cars for business purposes may be able to claim a bigger tax deduction if they lease their vehicles. A "Smart Money" magazine article titled "To Buy or to Lease" says taxpayers can deduct depreciation along with implicit financing costs for leased vehicles when they're used for business purposes. Interest charges paid on loans to buy cars aren't deductible even if the cars are used for business. Ensure that any lease you're considering includes gap insurance coverage. Gap insurance pays the difference between the cash value of your leased car and the balance on your lease if your vehicle is stolen or totaled in a collision. Gap insurance covers lessors if their auto policies don't pay for all expenses associated with thefts or severe collisions.

How to Calculate Annual Vehicle Interest

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The interest rate that the lending bank or car dealership presents to you upon purchasing an automobile is a simple interest loan. While the interest does add to the total amount of your purchase, it does not compound, which adds to the complexity of the time value of money. Determining the amount of interest that you must pay each year can help with budgeting and deciding if it is beneficial to pay off you car early.

Instructions

Determine the principal amount of the loan at the beginning of the year for which you are calculating the amount of annual interest. The remaining amount can be found on the first car payment bill you receive for the year. You can also determine the amount by subtracting the principal you paid on the last car payment for the previous year from the amount of the loan remaining. This information is included in every bill from your auto loan lender.

Multiply the remaining principal by the interest rate on your loan and divide by 12 to determine your first interest payment. For example, if $25,000 remains on the loan and your interest rate is 4.2 percent, then your first interest payment for the year is $87.50 (($25,000 x .042)/12).

Subtract the interest payment from your total monthly car payment to produce the amount you are paying on your principal for that month. For example, in the above example, your car payment is approximately $462.67 per month. Subtracting $87.50 from this amount gives a total of $375.17 that you are paying toward your principal.

Reduce the total principal amount by this monthly contribution toward your principal. So, subtract the $375.17 from $25,000 to show that $24,624.83 still remains on the loan. This number is used to determine the subsequent monthly interest payment.

Repeat the first step using the new principal balance over the life of the loan. So, you multiply $24,624.83 by 4.2 percent and divide by 12 to give you an interest payment of $86.19 for the second month. You have now paid a total of $173.69 in interest for the first two months of the year.

Repeat or the remaining 10 months, until you have done so for all 12 months of the year. Add together all of the monthly interest payments for each of the 12 months to determine the total for the year. Therefore, in the example, the total interest for the first year would be $962.32.

Prime Credit Scores for an Auto Loan

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Your ability to get a car loan depends largely on your credit score. Whichever financial lender you go to for a loan will check your credit score and if it's not a prime rate, you're not likely to get the loan. Or, if the lender is willing to give you the loan, you will be charged a higher interest rate. Your goal should be to keep your credit in the prime range to get the best deal you can from your financial lenders. This applies not only to car loans but other types of loans as well.

Credit scores are a summary of your credit history and credit worthiness. Scores range from 300 to 850. According to Leaseguide.com, the U.S. average is around 720. However, a prime rate is considered above 680 to 700. The number that will get you the best loan interest rate varies somewhat by lender. Subprime rates are generally below 640. Credit scores in this range are likely to bring about a rejection of your loan or a higher rate. People with credit scores below 500 can figure that they probably won't be approved for a loan.

Know your credit score before you begin shopping for a car; this will help you avoid paying an unnecessary rate. Obtain a free copy of your credit report from the Annual Credit Report website and check to make sure it is accurate. If you spot an error, contact the creditor and the credit reporting bureau to have it fixed. Buy access to your credit scores online from Trans Union, Experian and Equifax.

Lending rates vary among lenders. The break points for considering you credit score prime may, too. If your score is in the 680 to 700 range, check with lenders to find one that will consider your score prime and give you the better rate. Speak with a loan officer about lending guidelines. Check with your own bank; it may be willing to look more favorably upon scores that are on the bubble.

Improve your credit score by improving your credit history. Don't overextend your ability to pay your bills on time. Pay off accounts with balances on them, but leave the accounts open. The fact that you have been given credit by someone else will help your credit score. If you qualify, open other accounts, but you don't need to use them. Do not allow loans to default because that will drive down your score and remain on your credit history for seven years.

What Is a Zero APR Car Loan?

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If you want to save money when buying a new car, do your homework first. Check your credit, set a budget and research models within your price range. Consider factors that can significantly increase the cost of ownership, such as fuel mileage and insurance costs. Finally, look closely at financing options. If you see dealer advertisements for zero APR car loans, definitely investigate, but do not automatically assume this is the best option for you.

Annual percentage rate (APR) is the cost to finance your car. When you have an APR car loan, the sticker price of the car and interest on the loan determine your monthly payment. A zero APR car loan has no interest charge, leaving only the sticker price to determine the amount of your monthly payment. For example, if you purchase a car for $25,000 at an APR of 3.99 percent for 48 months, your monthly payment will be $564.36 and the total cost of your car will be $27,089.28. At a zero APR, the same car will cost $520.83 per month and the total cost will be the sticker price.

Zero APR car loans are a marketing tool automakers use when new cars sales are down. Because the objective is to increase sales on slower moving cars, this type of dealer financing is usually make and model specific, often excluding compact or fuel-efficient models according to SmartMoney.com. In return for a zero APR, dealers are often unwilling to negotiate on the price of the car, and most often you are not eligible for additional incentives, such as a cash rebate.

Unless you have a good credit rating, it can be difficult to qualify for a zero APR car loan. In general, you need at a minimum a credit score of 680 to 700, according to SmartMoney.com. In addition, most also require a down payment of at least 10 percent with good credit and up to 20 percent if your dealer will consider a zero APR car loan with a credit score of below 680. On a new car costing $25,000, your down payment could run between $2,500 and $5,000.

A zero APR car loan can be, but is not always, the best option. This is especially true if the dealer is offering a cash rebate option. It is a good idea to calculate the overall cost of both options before making a decision. For example, say you are considering a car that costs $20,000, you have a trade-in worth $4,000 and your options include a zero APR loan for 36 months with no rebate or a 3.99 percent APR for 36 months with a $2,000 rebate. If you choose the zero APR option, your monthly payment will be $444.44 and the total cost will be $16,000. Alternately, if you choose the rebate option and apply the rebate to the cost of your car, your monthly payment will be $413.27 and the total cost will be $14,877.85, saving you $1,122.15.

What Are My Legal Rights to Getting My Repossessed Car Back in Utah?

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Under Utah's Uniform Commerical Code, a creditor has the right to dispose of your repossessed car or sell the car at auction or private sale to a third party. If you want to buy back your vehicle, the creditor must inform you of the sale within a reasonable amount of time.

In Utah, you may buy back your repossessed car by paying the outstanding amount due, such as your most recent bill statement, plus any repossession charges. However, you must pay before the creditor sells the car at auction. The creditor is required by law to give you notice of the auction sale date, but you are not permitted to participate in the auction.

If you cannot pay the amount due before the auction takes place, the creditor will apply the car's sale price to your remaining loan amount. If the car sold for more than you owe, your creditor must provide you with the surplus amount. Conversely, if the car sold for less than you owe, your creditor will bill you for the difference, plus any repossession charges, which is known as a deficiency. However, if you voluntarily surrendered your car, Utah's Uniform Commercial Code states that your creditor cannot force you to pay your deficiency unless you owe more than $3,000.

You may be able to reverse or lower your deficiency if the repo man disrupted the peace while taking your car or the creditor failed to notify you of the auction day, sold your car in a commercially unreasonable manner or did not calculate your deficiency (or award you a surplus) correctly. Consult a consumer lawyer to discuss your options.

Filing Chapter 7 bankruptcy can prevent a repossession and Chapter 13 can both prevent and reverse a car repossession after the fact. If you file Chapter 7 before the repossession takes place, your creditor may not repossess the car, but you must resume making full payments. If you file Chapter 13 before repossession, the creditor may not repossess your car and your future payments (and total amount due) will be lowered if you owned the car for a minimum of 2 1/2 years. Chapter 13 also reverses an existing repossession after the fact.

How Old Do You Have to Be to Take Out a Car Loan?

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In order to obtain a car loan, an individual must sign a legally binding contract. There are laws in place that govern who can be legally bound to a contract. For that reason, banks have established guidelines that require loan applicants to be a certain age. Beyond age, banks also look at other factors to determine who can take out a car loan.

By law, with a few exceptions, an individual cannot sign a legally binding contract unless he is 18 or older. Therefore, an individual must be at least 18 in order to take out a car loan. Though an individual meets the age requirement, it does not mean the banks will approve him for a loan.

Banks will run a credit report to determine if the loan applicant has good credit. Because an 18-year-old is just getting started in life, he likely won't have a lot of opportunities to build his credit score. However, an easy way to build his score before he turns 18 is to "piggyback" on the credit of his parents or a close relative. In order to piggyback, an adult agrees to add the teenager's name as an authorized user on one or more of his credit accounts. When the teenager is listed as an authorized user, each time the adult makes a payment to the creditor, the payments are also reported to the teenager's credit profile. Before piggybacking, be sure the adult consistently makes payments on time. Otherwise, the late payments will damage the teenager's credit.

The teenager must have a steady income stream in order to take out a car loan. He must be able to prove his income level and employment. Without an income stream and steady employment, the bank has no way of determining if the individual is financially able to pay back the loan.

If the teenager does not have a good credit history and sufficient income, the banks will still allow him to take out a loan. However, the loan must have a co-signer. A co-signer is an individual who signs his name to the loan contract. The co-signer promises to be financially responsible if the teenager defaults on the loan.

Can Someone Take Over Payments on a Financed Vehicle?

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You cannot transfer your car payments and loan to another person unless your lender allows it. Because most auto loan providers do not allow loan or payment transfers, you must actually sell your vehicle to the person who wants to take over your car payments. Unless someone simply wants to pay your payments for you, expect to sell your vehicle for your loan's payoff amount.

Call your lender to find out more about its loan payoff process. Obtain your loan's payoff amount, which is the amount of money your buyer will have to provide to your lender to satisfy your loan. This is necessary to transfer ownership; most states and lenders do not release a title unless its lien is satisfied. Find out from your lender how long it will take to process the payoff paperwork and title or lien release and let your buyer know. Make any payments due during the sales process so you don't default on your loan.

Your current loan terms were based on the information provided by your credit report, your income and your vehicle's value at the time you initiated the loan. The person you want to transfer payments to likely has different credit and income than you. For this reason, lenders cannot transfer payments or loan balance and offer the same payments, as rates or lending requirements may differ. Also, your car's value may have changed. If you are upside down in your car loan, or owe more than your car is worth, your buyer may have to provide a down payment to obtain his own loan.

State required fees for the transfer of vehicle ownership may also alter your buyer's loan amount. Most states charge taxes on a vehicle purchase. Some states charge tax on the vehicle's value as determined by the state's appraisal method, not the sales price. Gifted vehicles may also require tax. The buyer can expect to pay state applicable title and registration fees to transfer ownership. State fees and taxes are in addition to your vehicle's loan amount, so your buyer may need a down payment.

Your buyer can apply for your loan's payoff amount through your lender, which can simplify the sales process; your lender can pay off your loan quickly and process the title for the new owner. Your buyer can use any auto loan provider she'd like. The loan approval process can take up to one week, which doesn't include the time required by your bank to process paperwork. Once your buyer is approved, arrange for him to pay your loan by accompanying him to your lender or calling in to authorize your buyer to pay toward the loan.

Tips for How to Buy a New Car With Bad Credit

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Bad credit doesn't necessary mean you can't obtain a new-car loan with a reasonable rate or that you even have bad credit at all, which is determined by possible lenders. Banks take many aspects of your life into account for loan approvals, including revolving accounts and history, mortgage payments, time on the job and time at your address. Learn what you can do to obtain a new-car loan.

Obtain a copy of your credit report from the Annual Credit Report website, which provides a free report from each of the three major credit bureaus once a year. Go over your credit report and determine whether or not you have any revolving accounts past due. A revolving account includes credit cards, mortgages and loans. If you do have accounts recently past due, catch up with your payments before applying for a new-car loan. If you can take care of any other negative items on your credit report, do so before applying. Keep receipts for any payments you make to provide to a dealership at the time you apply for new-car financing.

Some banks are more lenient with credit delinquencies than others. If you have a long-term job with decent pay and a stable, long-term address, you are more likely to obtain a new-car loan than someone who may have a better credit score but an inconsistent address and employment history. You can expect to provide a variety of information to the dealership for a new-car loan. In addition to any payment receipts you've obtained, bring your most recent paystub to prove your year-to-date income. If you are self-employed, bring in your last two years of tax returns to prove your income. Bring proof of residency, which includes a recent bill for a utility service, such as water, electric or cable. Do not bring in a final notice. Have your license with you and compile a list of five references, which is used for bank contact in case you default on your loan. Have names, addresses and phone numbers ready. Not all borrowers require you to supply this information, but it is common. Determine how much money you can put down towards the loan and make sure your funds are available before going to the dealership.

Work with a dealership. Start your buying process in the beginning of the month to allow the dealership some time to work on your car loan. Dealerships want to sell cars and give themselves until the end of each month to reach quotas. Many dealers have established relationships with banks they use frequently. However, if your credit is poor to bad, the dealership may need time to contact and work with its resources to obtain your loan. Let your salesperson know that you believe you have bad credit, as the dealer may have to base your new car options on rebates or price, depending on possible approvals. You may have to be open to other possibilities. For example, if the dealership can secure your loan, the bank may require you put down several thousand dollars. The dealer will work with you to find a car that has rebates (immediate money off) that can also be discounted in addition to your money down, allowing for a loan approval.

How Does a Dealer Incentive Work?

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Automotive sales are a very competitive business, especially in the age of price-conscious shoppers willing to drive between dealerships hunting for the best deal. To help dealerships boost their profit margins while remaining competitive, many automotive manufacturers provide dealerships with incentives and other programs that provide them with cash payments or refunds to sell certain vehicles or to manipulate invoice prices on vehicles. In some cases, dealers may pass these incentives onto consumers to become more competitive, although in some markets, dealers may retain them.

The most common form of dealer incentives are when automotive manufacturers provide dealers with a cash incentive to sell a certain type of car. Usually coupled with an effort to clear inventories of last year's model or otherwise unpopular cars, automotive manufacturers provide dealers with cash payments for each qualifying vehicle they sell. With a concrete bonus to sell more of a particular type of car, dealers theoretically work harder to earn larger amounts of dealer incentives. In some situations, dealers may pass on incentives, or portions of incentives, to consumers to help entice them into purchasing from that lot.

In some cases, dealerships receive incentives from banks and loan companies from referring customers to them for automotive loans. In the case that a dealership doesn't provide financing direct from the manufacturer, finance companies provide bonuses and incentives to dealers for providing them with potentially lucrative loans. In some cases, dealers receive higher incentives for steering buyers into loans with higher interest rates, so consumers should be knowledgeable of loan rates before discussing financing with dealers, according to Bankrate.

To help keep invoice costs higher and provide the illusion of sales at a slim profit margin to consumers, most manufacturers provide holdback programs. In these programs, dealers are invoiced for the full price of the vehicle stated on its invoice that consumers read. Periodically, long after receiving payment on invoices, dealerships refund a portion of the price, known as holdback, to dealers. This practice allows dealers to sell vehicles at invoice price and still turn a profit.

Vehicle manufactures also offer incentives to consumers to help entice them into purchasing their wares. Consumer incentives may vary from cash-back programs to manufacturer-subsidized financing. Because auto makers provide these incentives directly to consumers, dealerships aren't involved, and incentives can't be held back to help boost profit margins. In some cases, dealerships will provide their incentives to consumers in order to increase the allure of purchasing at that dealership rather than at a competitor's lot.

How to Finance a Mobility Van

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A mobility van is a van that is equipped to meet the needs of a handicapped person. A mobility van is usually a regular van that is modified to meet the needs of the person using the van. Purchasing a modified van typically costs $20,000 to $30,000. The cost of modifying a standard van is typically $5,000 to $15,000 depending upon the type and extend of modifications that need to be made to accommodate the user. Banks and credit unions commonly offer auto loans that can be used to cover the costs associated with purchasing or modifying a mobility van. Other options for obtaining funding also exist.

Instructions

Apply for financing through a patient-focused financing company, such as PFS Patient Financing (see Resources). These companies tend to be more lenient with their qualification requirements than traditional banks. Additionally, they tend to offer more favorable repayment terms than banks. Many of these companies require a doctor's statement along with employment verification to obtain funding. Have these documents available before contacting these companies.

Contact your local Veteran's Administration (VA) to apply for funding through the VA if the van will be used for a veteran. (See Resources) Grants are available through the VA for veterans to utilize to purchase a mobility van or to modify a traditional van. The application process typically involves a medical exam by a VA doctor and a request for funding.

Contact the Knights of Columbus chapter in your local area (see Resources) to apply for a grant from them. The Knights of Columbus offer grants that can be used to purchase or modify a mobility van if the mobility van will be used for a child. Usually, a doctor's statement outlining the nature of the disability and need for a mobility van is required with the application, though this can vary from chapter to chapter.

How to Get Your Name Removed As the Co-Signer of a Car Loan

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As the co-signer on another person's car loan, you are held legally responsible for repaying the debt. The lender relied on your good credit as security against the risk of lending to the primary borrower, who likely had bad or no credit. The only ways to get your name removed from the obligation are to get the lender to agree to release you or to have the primary borrower refinance the loan without you. You will require the primary borrower's cooperation for either of these solutions, so there is no guarantee that they will work.

Instructions

Tell the primary borrower that you would like to be released from your obligations as a co-signer.

Ask the primary borrower contact the lender and ask to apply for co-signer release. If the borrower has made all of the payments on time so far and has a higher credit score than when he first applied, the lender might be willing to remove your name from the loan.

Get, in writing, the agreement that says you are released from all obligations with the loan. This release form will make it impossible for the lender to pursue you for payments in the future.

Tell the primary borrower that you would like him to refinance his auto loan.

Help the borrower pull a copy of his credit report from the Annual Credit Report website and check its accuracy. If there is anything inaccurate, follow the instructions printed on the credit report to dispute the errors. Wait for confirmation that errors have been fixed before proceeding.

Ask the primary borrower to apply for an auto loan refinance with the same lender or a different lender. He will either need to qualify on his own with his credit history or find someone else to co-sign the loan.

Tell the primary borrower to keep making payments on the loan on which you are a co-signer until he receives confirmation that it was paid off with the refinance loan. If he misses a payment, this will hurt your credit score.

10 Things to Look for When Buying a Used Car

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When you set out to buy a used car, you do not want to make your final decision until a qualified mechanic has looked the car over and given you an honest assessment. But before you bring a vehicle to the mechanic, there are things you can look for to give you an idea as to whether or not you want to purchase the vehicle.

You can buy a tire tread gauge at any auto parts store. Use the gauge to check the tread on the tires of the car you are considering buying. Remember that low tread should not be a deal breaker, it just means you may need to buy new tires along with buying the vehicle.

Examine the tires closely to see of there is any uneven wear on the tires. If the outer edge of the front right tire is bald, but not the inner edge of the left tire, then the vehicle is out of alignment. Once again, this should not be a deal breaker but the need for an alignment is something you should make note of.

Before you examine the car, ask the owner to move it to a spot in the driveway that is clean. After looking the car over, ask the owner to move the car back to its original spot. If there are puddles where the car was parked, the something could be leaking. A shiny black puddle is oil, a green puddle is anti-freeze and a pink puddle is transmission fluid. This could be the sign of a much more serious problem.

Some car scratches are worse than others. If you see white at the bottom of a scratch, the scratch has not gone down to the metal. That scratch can be touched up with a touch-up kit with no problem. If you see silver or brown at the bottom of the scratch then the scratch has gone down to the metal. Silver means it is a fresh scratch, and brown means the scratch is already starting to rust.

If the car has seat covers then ask that they be removed. Any rips in the seat upholstery will only get worse over time even when covered by a seat cover.

An automatic transmission that is slow to shift is low on fluid. That could be neglect on the part of the owner, or a transmission leak.

When you press down on the brakes they should give you resistance immediately. If you can press down almost to the floor then the brakes are soft. This could mean the brakes are low on fluid, or it could be a sign that the brakes need work.

Over time the bearings on your car's wheels begin to wear out. Bearings are expensive to replace. If you hear a deep buzzing, or even a grinding sound, that seems to be coming from the front of the car, it could be the bearings. They should be looked at before you decide to purchase.

Cars have become incredibly complex machines run by electronic sensors and computers. If you are test driving a used car that has the "check engine" indicator lit up, it should be a red flag. The seller should take care of a "check engine" problem before putting the car on the market. No matter how much the seller tries to play down the importance of the indicator light, do not purchase a used car with the "check engine" light on.

Indicator lights other than the "check engine" light should alert you to a problem, and it should be taken care of before you purchase the vehicle. Tell the seller that you would like to take the vehicle to a certified mechanic to find out why the indicator light is on, and you would like the problem taken care of before you buy the vehicle.

How to Turn in a Bank-Owned Car for Repo

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Having your car repossessed can be a terrible experience. The vehicle can be taken at any time, night or day, and most states allow the agent repossessing your car to come on to your property to do so. This can happen once your auto loan has gone into default. A simpler way to deal with this situation is to turn the vehicle in directly for repossession by working directly with the bank holding the loan. This lets you know when you will lose the vehicle and avoid the stress of wondering when or where it will happen. This also helps you avoid fees associated with the repossession of the car, fees that ultimately are the borrower's responsibility.

Instructions

Contact the bank holding the loan and ask to speak with the representative working on your defaulted loan. This could be a department instead of a single person if you are working with a larger bank.

Talk to the representative about your loan and the status. Find out the policy of when a vehicle is subject to repossession. Most banks will give time for a person to catch up on the loan before repossessing the car, because they would rather get their money than go through the repossession process.

Offer to turn your car in at the bank office or to meet an authorized agent of the bank at an agreed upon location. Banks would rather receive the vehicle directly to avoid the uncertainty of finding and repossessing the vehicle. If the bank does not have an office near you or does not accept cars at their office, they will make arrangements for the company or person that handles their repossessed vehicles to meet with you and receive the vehicle. Schedule a time and place to meet.

Remove any personal belongings and make sure all the keys, manuals and other items that belong with the car are in the car before turning it in.

Take the car to the scheduled meeting. Make sure you have a ride away from the meeting if it will be needed. Turn over the car and any items that go with the car. The car will be sold at auction or resold by the bank to another buyer. You will still be responsible for any money owed on the car minus any money they receive for the car. If you owe $10,000 and they sell it for $8,000, you will still owe the bank $2,000 plus any repossession fees incurred.

How to Reduce Interest Rate on Current Car Loan With Bad Credit

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You read every day about how low interest rates are. Yet the rates on your car loan are far higher. The reason might be your credit: Lenders charge higher interest rates for borrowers whose credit scores are under 740. Even with bad credit, you might be able to lower the rate on your car loan. Doing so, though, is challenging: You'll have to prove to your lender that you've suffered a financial hardship that has made paying your current car loan too difficult.

Instructions

Gather and make copies of the financial statements that you'll eventually send to your auto lender to prove that you gross monthly income has taken a fall thanks to a financial setback. Gather those that prove, too, that your monthly debt obligations have not fallen accordingly. These papers include your credit-card statements, other loan statements, federal income tax return and most recent paychecks.

Call your auto lender at the number on your current loan statement. Explain that you've recently suffered a financial hardship--it could be a job loss, illness or drop in annual income--that has made it impossible for you to pay your auto loan payments each month. Request that your lender lower your interest rate as a way to make your payments affordable.

Write a financial hardship letter that spells out exactly why you can no longer afford your monthly auto payments. Also include your request for a lower interest rate and lower monthly payment.

Mail, fax or send by e-mail your hardship letter and the copies you made in Step 1. Give your lender time to review this paperwork. Your lender will need to determine if your hardship is severe enough to warrant a reduction in your interest rate, despite your bad credit.

Agree to a new interest rate if your lender approves your request. Make sure that you can afford the new payment that results.

Friday, December 31, 2010

Parental Loans

Car Loans

Student Loans

Personal Loans

Thursday, December 30, 2010

Instructions

Wednesday, December 29, 2010

Instructions

Return

Swap

Tuesday, December 28, 2010

Loan-to-Value Ratio

Income Issues

Interest Rate and Term Consideration

Depreciation and Loan Amount

Loan Determination

Buyer's Application

Additional Buyer Charges

Another Option

Lower Lease Payment

Less Down Payment

Avoid Private-Sale Issues

Warning

Monday, December 27, 2010

Instructions

Substantial Down Payment Risk

Determine Leasing Benefits

Leasing Payment Structure

Make Sure You Like The Car You Lease

Thursday, December 23, 2010

Instructions

Wednesday, December 22, 2010

Instructions

Instructions

How Title Loans Work

Basic Title Loan Requirements

Title Loan Risks

Read Title Loan Terms Carefully

Instructions

Kelley Blue Book

Edmunds

Saturday, December 18, 2010

Pros of Leasing

Cons of Leasing

Pros of Buying

Cons of Buying

Thursday, December 16, 2010

Instructions

Tuesday, December 14, 2010

Instructions

Determine a Fair Offer

Negotiating

Interest Rates

Depreciation

Maintenance

Market Conditions

Shared Responsibility

What Happens After Death

What You May Need To Do

Word of Caution

Description

Advantages

Drawbacks

Leasing Versus Buying

Monday, December 13, 2010

Identification

Reasons

Recourse

Considerations

Implied Warranty

Lemon Law

Unfair or Deceptive Acts or Practices

Sales Taxes

Instructions

Sunday, December 12, 2010

Inspect the Vehicle

Inspect the Title

Make the Purchase

Bill of Sale